exv10w9





Exhibit 10.9



RULES-BASED MEDICINE, INC.




2007 LONG TERM INCENTIVE PLAN





 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	1. Purpose
	 	 	1	 
	2. Definitions
	 	 	1	 
	3. Administration
	 	 	3	 
	(a) Authority of the Committee
	 	 	3	 
	(b) Manner of Exercise of Committee Authority
	 	 	4	 
	(c) Limitation of Liability
	 	 	4	 
	4. Stock Subject to Plan
	 	 	4	 
	(a) Overall Number of Shares Available for Delivery
	 	 	4	 
	(b) Application of Limitation to Grants of Awards
	 	 	5	 
	(c) Availability of Shares Not Issued under Awards
	 	 	5	 
	(d) Stock Offered
	 	 	5	 
	5. Eligibility
	 	 	5	 
	6. Specific Terms of Awards
	 	 	5	 
	(a) General
	 	 	5	 
	(b) Options
	 	 	5	 
	(c) Stock Appreciation Rights
	 	 	6	 
	(d) Restricted Stock
	 	 	8	 
	(e) Restricted Stock Units
	 	 	8	 
	(f) Bonus Stock and Awards in Lieu of Obligations
	 	 	9	 
	(g) Dividend Equivalents
	 	 	9	 
	(h) Other Stock-Based Awards
	 	 	9	 
	7. Certain Provisions Applicable to Awards
	 	 	9	 
	(a) Termination of Employment
	 	 	9	 
	(b) Stand-Alone, Additional, Tandem, and Substitute Awards
	 	 	10	 
	(c) Term of Awards
	 	 	10	 
	(d) Form and Timing of Payment under Awards
	 	 	10	 
	(e) Non-Competition Agreement
	 	 	10	 
	8. Subdivision or Consolidation; Recapitalization; Change in Control;
Reorganization
	 	 	10	 
	(a) Existence of Plans and Awards
	 	 	10	 
	(b) Subdivision or Consolidation of Shares
	 	 	11	 
	(c) Corporate Recapitalization
	 	 	11	 
	(d) Additional Issuances
	 	 	12	 
	(e) Change in Control
	 	 	12	 
	(f) Change in Control Price
	 	 	13	 
	9. General Provisions
	 	 	13	 
	(a) Restricted Securities
	 	 	13	 
	(b) Transferability
	 	 	14	 






 









 






	 	 	 	 	 
	 	 	Page
	(c) Right of First Refusal
	 	 	15	 
	(d) Purchase Option
	 	 	17	 
	(e) Taxes
	 	 	18	 
	(f) Changes to this Plan and Awards
	 	 	18	 
	(g) Limitation on Rights Conferred under Plan
	 	 	19	 
	(h) Unfunded Status of Awards
	 	 	19	 
	(i) Nonexclusivity of this Plan
	 	 	19	 
	(j) Fractional Shares
	 	 	19	 
	(k) Severability
	 	 	19	 
	(l) Governing Law
	 	 	20	 
	(m) Conditions to Delivery of Stock
	 	 	20	 
	(n) Section 409A of the Code
	 	 	20	 
	(o) Plan Effective Date
	 	 	20	 






 









 








RULES-BASED MEDICINE, INC.




2007 Long Term Incentive Plan




     1. Purpose. The purpose of the Rules-Based Medicine, Inc. 2007 Long Term Incentive Plan (the
“Plan”) is to provide a means through which Rules-Based Medicine, Inc., a Delaware corporation (the
“Company”), and its Subsidiaries may attract and retain able persons as employees, directors and
consultants of the Company, and its Subsidiaries, and to provide a means whereby those persons upon
whom the responsibilities of the successful administration and management of the Company, and its
Subsidiaries, rest, and whose present and potential contributions to the welfare of the Company,
and its Subsidiaries, are of importance, can acquire and maintain stock ownership, or awards the
value of which is tied to the performance of the Company, thereby strengthening their concern for
the welfare of the Company, and its Subsidiaries, and their desire to remain employed. A further
purpose of this Plan is to provide such employees, directors and consultants with additional
incentive and reward opportunities designed to enhance the profitable growth of the Company.
Accordingly, this Plan primarily provides for the granting of Incentive Stock Options, options
which do not constitute Incentive Stock Options, Restricted Stock Awards, Restricted Stock Units,
Stock Appreciation Rights or any combination of the foregoing, as is best suited to the
circumstances of the particular individual as provided herein.



     2. Definitions. For purposes of this Plan, the following terms shall be defined as set forth
below, in addition to such terms defined in Section 1 hereof:



          (a) “Award” means any Option, SAR (including Limited SAR), Restricted Stock Award, Restricted
Stock Unit, Bonus Stock, Dividend Equivalent, or Other Stock-Based Award, together with any other
right or interest granted to a Participant under this Plan.




          (b) “Beneficiary” means one or more persons, trusts or other entities which have been
designated by a Participant, in his or her most recent written beneficiary designation filed with
the Committee, to receive the benefits specified under this Plan upon such Participant’s death or
to which Awards or other rights are transferred if and to the extent permitted under Subsection
9(b) hereof. If, upon a Participant’s death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the persons, trusts or other entities
entitled by will or the laws of descent and distribution to receive such benefits.




          (c) “Board” means the Company’s Board of Directors.




          (d) “Change in Control” means a “Deemed Liquidation Event” as such term is defined in the
Amended and Restated Certificate of Incorporation of the Company executed [date], 2007.




          (e) “Code” means the Internal Revenue Code of 1986, as amended from time to time, including
regulations thereunder and successor provisions and regulations thereto.




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          (f) “Committee” means a committee of two or more directors designated by the Board to
administer this Plan.




          (g) “Dividend Equivalent” means a right, granted to a Participant under Subsection 6(g), to
receive cash, Stock, other Awards or other property equal in value to dividends paid with respect
to a specified number of shares of Stock, or other periodic payments.




          (h) “Effective Date” means October 12, 2007.




          (i) “Eligible Person” means all officers and employees of the Company or of any Subsidiary,
and other persons who provide services to the Company or any of its Subsidiaries, including
directors of the Company. An employee on leave of absence may be considered as still in the employ
of the Company or a Subsidiary for purposes of eligibility for participation in this Plan.




          (j) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
including rules thereunder and successor provisions and rules thereto.




          (k) “Fair Market Value” means, as of any specified date, (i) if the Stock is listed on a
national securities exchange, the closing sales price of the Common Stock as reported on the stock
exchange composite tape on that date (or if no sales occur on that date, on the last preceding date
on which such sales of the Stock are so reported); (ii) if the Stock is not traded on the National
Market System of the NASDAQ or a national securities exchange but is traded over the counter at the
time a determination of its fair market value is required to be made under the Plan, the average
between the reported closing bid and asked prices of Stock on the most recent date on which Stock
was publicly traded; or (iii) in the event Stock is not publicly traded at the time a determination
of its value is required to be made under the Plan, the amount determined by the Board in its
discretion in such manner as it deems appropriate, taking into consideration all factors the Board
deems appropriate including without limitation, the Nonqualified Deferred Compensation Rules.




          (l) “Incentive Stock Option” or “ISO” means any Option intended to be and designated as an
incentive stock option within the meaning of section 422 of the Code or any successor provision
thereto.




          (m) “Nonqualified Deferred Compensation Rules” means the limitations or requirements of
section 409A of the Code and the regulations promulgated thereunder.




          (n) “Option” means a right, granted to a Participant under Subsection 6(b) hereof, to purchase
Stock or other Awards at a specified price during specified time periods.




          (o) “Other Stock-Based Awards” means Awards granted to a Participant under Subsection 6(h)
hereof.




          (p) “Participant” means a person who has been granted an Award under this Plan which remains
outstanding, including a person who is no longer an Eligible Person.




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          (q) “Person” means any person or entity of any nature whatsoever, specifically including an
individual, a firm, a company, a corporation, a partnership, a limited liability company, a trust
or other entity; a Person, together with that Person’s Affiliates and Associates (as those terms
are defined in Rule 12b-2 under the Exchange Act, provided that “registrant” as used in Rule 12b-2
shall mean the Company), and any Persons acting as a partnership, limited partnership, joint
venture, association, syndicate or other group (whether or not formally organized), or otherwise
acting jointly or in concert or in a coordinated or consciously parallel manner (whether or not
pursuant to any express agreement), for the purpose of acquiring, holding, voting or disposing of
securities of the Company with such Person, shall be deemed a single “Person.”




          (r) “Qualifying Public Offering” shall mean a firm commitment underwritten public offering of
Stock for cash where the shares of Stock registered under the Securities Act are listed on a
national securities exchange or the NASDAQ Stock Market.




          (s) “Restricted Stock” means Stock granted to a Participant under Subsection 6(d) hereof, that
is subject to certain restrictions and to a risk of forfeiture.




          (t) “Restricted Stock Unit” means a right, granted to a Participant under Subsection 6(e)
hereof, to receive Stock, cash or a combination thereof at the end of a specified deferral period.




          (u) “Securities Act” means the Securities Act of 1933 and the rules and regulations
promulgated thereunder, or any successor law, as it may be amended from time to time.




          (v) “Stock” means the Company’s Common Stock, par value $0.001 per share, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to Section 8.




          (w) “Stock Appreciation Rights” or “SAR” means a right granted to a Participant under
Subsection 6(c) hereof.




          (x) “Subsidiary” means with respect to the Company, any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interest is owned, directly
or indirectly, by the Company.




     3. Administration.



          (a) Authority of the Committee. This Plan shall be administered by the Committee
except to the extent the Board elects to administer this Plan, in which case references herein to
the “Committee” shall be deemed to include references to the “Board.” Subject to the express
provisions of the Plan, the Committee shall have the authority, in its sole and absolute
discretion, to (i) adopt, amend, and rescind administrative and interpretive rules and regulations
relating to the Plan; (ii) determine the Eligible Persons to whom, and the time or times at which,
Awards shall be granted; (iii) determine the amount of cash and the number of shares of Stock,
Stock Appreciation Rights, Restricted Stock Units or Restricted Stock Awards, or any combination
thereof, that shall be the subject of each Award; (iv) determine the terms and



3









 






provisions of each Award agreement (which need not be identical), including provisions
defining or otherwise relating to (A) the term and the period or periods and extent of
exercisability of the Options, (B) the extent to which the transferability of shares of Stock
issued or transferred pursuant to any Award is restricted, (C) except as otherwise provided herein,
the effect of termination of employment, or the service relationship with the Company, of a
Participant on the Award, and (D) the effect of approved leaves of absence (consistent with any
applicable regulations of the Internal Revenue Service); (v) accelerate the time of exercisability
of any Award that has been granted; (vi) construe the respective Award agreements and the Plan;
(vii) delegate its duties under the Plan to such agents as it may appoint from time to time; and
(viii) make all other determinations, perform all other acts, and exercise all other powers and
authority necessary or advisable for administering the Plan, including the delegation of those
ministerial acts and responsibilities as the Committee deems appropriate. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in the Plan, in any Award,
or in any Award agreement in the manner and to the extent it deems necessary or desirable to carry
the Plan into effect, and the Committee shall be the sole and final judge of that necessity or
desirability. The determinations of the Committee on the matters referred to in this Subsection
3(a) shall be final and conclusive. Any determination of the Fair Market Value of Stock for
purposes of the Plan will be made by the Board.




          (b) Manner of Exercise of Committee Authority. Any action of the Committee shall be
final, conclusive and binding on all persons, including the Company, its Subsidiaries,
stockholders, Participants, Beneficiaries, and transferees under Subsection 9(b) hereof or other
persons claiming rights from or through a Participant. The express grant of any specific power to
the Committee, and the taking of any action by the Committee, shall not be construed as limiting
any power or authority of the Committee. The Committee may delegate to officers or managers of the
Company or any Subsidiary, or committees thereof, the authority, subject to such terms as the
Committee shall determine, to perform such functions, including administrative functions, as the
Committee may determine.




          (c) Limitation of Liability. The Committee and each member thereof shall be entitled
to, in good faith, rely or act upon any report or other information furnished to him or her by any
officer or employee of the Company or a Subsidiary, the Company’s legal counsel, independent
auditors, consultants or any other agents assisting in the administration of this Plan. Members of
the Committee and any officer or employee of the Company or a Subsidiary acting at the direction or
on behalf of the Committee shall not be personally liable for any action or determination taken or
made in good faith with respect to this Plan, and shall, to the fullest extent permitted by law, be
indemnified and held harmless by the Company with respect to any such action or determination.




     4. Stock Subject to Plan.



          (a) Overall Number of Shares Available for Delivery. Subject to adjustment in a
manner consistent with any adjustment made pursuant to Section 8, the total number of shares of
Stock reserved and available for issuance in connection with Awards under this Plan shall not
exceed 820,749 shares.




4









 








          (b) Application of Limitation to Grants of Awards. No Award may be granted if the
number of shares of Stock to be delivered in connection with such Award exceeds the number of
shares of Stock remaining available under this Plan minus the number of shares of Stock issuable in
settlement of or relating to then-outstanding Awards. The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments if the number of shares of Stock actually
delivered differs from the number of shares previously counted in connection with an Award.




          (c) Availability of Shares Not Issued under Awards. Shares of Stock subject to an
Award under this Plan that expire or are canceled, forfeited, settled in cash or otherwise
terminated without an issuance of shares to the Participant, including (i) the number of shares
withheld in payment of any exercise or purchase price of an Award or taxes relating to Awards, and
(ii) the number of shares surrendered in payment of any exercise or purchase price of an Award or
taxes relating to any Award, will again be available for Awards under this Plan.




          (d) Stock Offered. The shares to be delivered under the Plan shall be made available
from (i) authorized but unissued shares of Stock, (ii) Stock held in the treasury of the Company,
or (iii) previously issued shares of Stock reacquired by the Company, including shares purchased on
the open market.




     5. Eligibility. Awards may be granted under this Plan only to Persons who are Eligible
Persons at the time of grant thereof.



     6. Specific Terms of Awards.



          (a) General. Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date
of grant or thereafter (subject to Subsection 9(f)), such additional terms and conditions, not
inconsistent with the provisions of this Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment by the Participant, or
termination of the Participant’s service relationship with the Company, and terms permitting a
Participant to make elections relating to his or her Award. The Committee shall retain full power
and discretion to accelerate, waive or modify, at any time, any term or condition of an Award that
is not mandatory under this Plan.




          (b) Options. The Committee is authorized to grant Options to Participants on the
following terms and conditions:




               (i) Exercise Price. Each Option agreement shall state the exercise price per share of
Stock (the “Exercise Price”); provided, however, that the Exercise Price per share
of Stock subject to an ISO shall not be less than the greater of (A) the par value per share of the
Stock or (B) 100% of the Fair Market Value per share of the Stock as of the date of grant of the
Option (or in the case of an individual who owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or its parent or any subsidiary, 110%
of the Fair Market Value per share of the Stock on the date of grant).



5









 





               (ii) Time and Method of Exercise. The Committee shall determine the time or times at
which or the circumstances under which an Option may be exercised in whole or in part (including
based on achievement of performance goals and/or future service requirements), the methods by which
such exercise price may be paid or deemed to be paid, the form of such payment, including without
limitation cash, Stock, other Awards or awards granted under other plans of the Company or any
Subsidiary, or other property (including notes or other contractual obligations of Participants to
make payment on a deferred basis), and the methods by or forms in which Stock will be delivered or
deemed to be delivered to Participants, including, but not limited to, the delivery of Restricted
Stock subject to Subsection 6(d). In the case of an exercise whereby the Exercise Price is paid
with Stock, such Stock shall be valued as of the date of exercise.



               (iii) ISOs. The terms of any ISO granted under this Plan shall comply in all respects
with the provisions of section 422 of the Code. Anything in this Plan to the contrary
notwithstanding, no term of this Plan relating to ISOs (including any SAR in tandem therewith)
shall be interpreted, amended or altered, nor shall any discretion or authority granted under this
Plan be exercised, so as to disqualify either this Plan or any ISO under section 422 of the Code,
unless the Participant has first requested the change that will result in such disqualification.
ISOs shall not be granted more than ten years after the earlier of the adoption of this Plan or the
approval of this Plan by the Company’s stockholders. Notwithstanding the foregoing, the Fair Market
Value of shares of Stock subject to an ISO and the aggregate Fair Market Value of shares of stock
of any parent or Subsidiary corporation (within the meaning of sections 424(e) and (f) of the Code)
subject to any other ISO (within the meaning of section 422 of the Code) of the Company or a parent
or Subsidiary corporation (within the meaning of sections 424(e) and (f) of the Code) that first
becomes purchasable by a Participant in any calendar year may not (with respect to that
Participant) exceed $100,000, or such other amount as may be prescribed under section 422 of the
Code or applicable regulations or rulings from time to time. As used in the previous sentence,
Fair Market Value shall be determined as of the date the ISOs are granted. Failure to comply with
this provision shall not impair the enforceability or exercisability of any Option, but shall cause
the excess amount of shares to be reclassified in accordance with the Code.



          (c) Stock Appreciation Rights. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:




               (i) Right to Payment. An SAR shall confer on the Participant to whom it is granted a
right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share of
Stock on the date of exercise over (B) the grant price of the SAR as determined by the Committee.



               (ii) Rights Related to Options. An SAR granted in connection with an Option shall
entitle a Participant, upon exercise, to surrender that Option or any portion thereof, to the
extent unexercised, and to receive payment of an amount computed pursuant to Subsection
6(c)(ii)(B). That Option shall then cease to be exercisable to the extent surrendered. SARs
granted in connection with an Option shall be subject to the terms of the Award agreement governing
the Option, which shall comply with the following provisions in addition to those applicable to
Options:



6









 





                    (A) An SAR granted in connection with an Option shall be exercisable only at such time or
times and only to the extent that the related Option is exercisable.



                    (B) Upon the exercise of an SAR related to an Option, a Participant shall be entitled to
receive payment from the Company of an amount determined by multiplying:



                         (1) the difference obtained by subtracting the exercise price of a share of Stock specified in
the related Option from the Fair Market Value of a share of Stock on the date of exercise of the
SAR, by



                         (2) the number of shares as to which that SAR has been exercised.



               (iii) Right Without Option. An SAR granted independent of an Option shall be
exercisable as determined by the Committee and set forth in the Award agreement governing the SAR,
which Award agreement shall comply with the following provisions:



                    (A) Each Award agreement shall state the total number of shares of Stock to which the SAR
relates.



                    (B) Each Award agreement shall state the time or periods in which the right to exercise the
SAR or a portion thereof shall vest and the number of shares of Stock for which the right to
exercise the SAR shall vest at each such time or period.



                    (C) Each Award agreement shall state the date at which the SARs shall expire if not previously
exercised.



                    (D) Each SAR shall entitle a participant, upon exercise thereof, to receive payment of an
amount determined by multiplying:



                         (1) the difference obtained by subtracting the Fair Market Value of a share of Stock on the
date of grant of the SAR from the Fair Market Value of a share of Stock on the date of exercise of
that SAR, by



                         (2) the number of shares as to which the SAR has been exercised.



               (iv) Terms. Except as otherwise provided herein, the Committee shall determine at the
date of grant or thereafter, the time or times at which and the circumstances under which an SAR
may be exercised in whole or in part (including based on achievement of performance goals and/or
future service requirements), the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem or in combination with any
other Award, and any other terms and conditions of any SAR. SARs may be either freestanding or in
tandem with other Awards.



7









 





          (d) Restricted Stock. The Committee is authorized to grant Restricted Stock to
Participants on the following terms and conditions:




               (i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose,
which restrictions may lapse separately or in combination at such times, under such circumstances
(including based on achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the date of grant or thereafter.
During the restricted period applicable to the Restricted Stock, the Restricted Stock may not be
sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant.



               (ii) Certificates for Stock. Restricted Stock granted under this Plan may be
evidenced in such manner as the Committee shall determine. If certificates representing Restricted
Stock are registered in the name of the Participant, the Committee may require that such
certificates bear an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession of the
certificates, and that the Participant deliver a stock power to the Company, endorsed in blank,
relating to the Restricted Stock.



               (iii) Dividends and Splits. As a condition to the grant of an Award of Restricted
Stock, the Committee may require or permit a Participant to elect that any cash dividends paid on a
share of Restricted Stock be automatically reinvested in additional shares of Restricted Stock or
applied to the purchase of additional Awards under this Plan. Unless otherwise determined by the
Committee, Stock distributed in connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which such Stock or other property has been
distributed.



          (e) Restricted Stock Units. The Committee is authorized to grant Restricted Stock
Units to Participants, which are rights to receive Stock or cash, as determined by the Committee,
at the end of a specified deferral period, subject to the following terms and conditions:




               (i) Award and Restrictions. Settlement of an Award of Restricted Stock Units shall
occur upon expiration of the deferral period specified for such Restricted Stock Unit by the
Committee (or, if permitted by the Committee, as elected by the Participant). In addition,
Restricted Stock Units shall be subject to such restrictions (which may include a risk of
forfeiture) as the Committee may impose, if any, which restrictions may lapse at the expiration of
the deferral period or at earlier specified times (including based on achievement of performance
goals and/or future service requirements), separately or in combination, in installments or
otherwise, as the Committee may determine. Restricted Stock Units shall be satisfied by the
delivery of cash or Stock in the amount equal to the Fair Market Value of the specified number of
shares of Stock covered by the Restricted Stock Units, or a combination thereof, as determined by
the Committee at the date of grant or thereafter.



8









 





               (ii) Dividend Equivalents. Unless otherwise determined by the Committee at date of
grant, Dividend Equivalents on the specified number of shares of Stock covered by an Award of
Restricted Stock Units shall be either (A) paid with respect to such Restricted Stock Units on the
dividend payment date in cash or in shares of unrestricted Stock having a Fair Market Value equal
to the amount of such dividends, or (B) deferred with respect to such Restricted Stock Units and
the amount or value thereof automatically deemed reinvested in additional Restricted Stock Units,
other Awards or other investment vehicles, as the Committee shall determine or permit the
Participant to elect.



          (f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to
grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations to pay cash or
deliver other property under this Plan or under other plans or compensatory arrangements. Stock or
Awards granted hereunder shall be subject to such other terms as shall be determined by the
Committee. In the case of any grant of Stock to an officer of the Company or a Subsidiary in lieu
of salary or other cash compensation, the number of shares granted in place of such compensation
shall be reasonable, as determined by the Committee.




          (g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents
to a Participant, entitling the Participant to receive cash, Stock, other Awards, or other property
equal in value to dividends paid with respect to a specified number of shares of Stock, or other
periodic payments. Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award. The Committee may provide that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or
other investment vehicles, and subject to such restrictions on transferability and risks of
forfeiture, as the Committee may specify.




          (h) Other Stock-Based Awards. The Committee is authorized, subject to limitations
under applicable law, to grant to Participants such other Awards that may be denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as
deemed by the Committee to be consistent with the purposes of this Plan, including without
limitation convertible or exchangeable debt securities, other rights convertible or exchangeable
into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of
the Company or any other factors designated by the Committee, and Awards valued by reference to the
book value of Stock or the value of securities of, or the performance of, specified Subsidiaries.
The Committee shall determine the terms and conditions of such Awards. Stock delivered pursuant to
an Award in the nature of a purchase right granted under this Subsection 6(h) shall be purchased
for such consideration, paid for at such times, by such methods, and in such forms, including,
without limitation, cash, Stock, other Awards, or other property, as the Committee shall determine.
Cash awards, as an element of or supplement to any other Award under this Plan, may also be
granted pursuant to this Subsection 6(h).




     7. Certain Provisions Applicable to Awards.



          (a) Termination of Employment. Except as provided herein, the treatment of an Award
upon a termination of employment or any other service relationship by and between a Participant and
the Company or any Subsidiary shall be specified in the agreement controlling such Award.




9









 








          (b) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under this
Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem
with, or in substitution or exchange for, any other Award or any award granted under another plan
of the Company, any Subsidiary, or any business entity to be acquired by the Company or a
Subsidiary, or any other right of a Participant to receive payment from the Company or any
Subsidiary. Such additional, tandem and substitute or exchange Awards may be granted at any time.
If an Award is granted in substitution or exchange for another Award, the Committee shall require
the surrender of such other Award in consideration for the grant of the new Award. In addition,
Awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under
other plans of the Company or any Subsidiary, in which the value of Stock subject to the Award is
equivalent in value to the cash compensation, or in which the exercise price, grant price or
purchase price of the Award in the nature of a right that may be exercised is equal to the Fair
Market Value of the underlying Stock minus the value of the cash compensation surrendered.




          (c) Term of Awards. Except as specified herein, the term of each Award shall be for
such period as may be determined by the Committee; provided, however, that in no
event shall the term of any Option or SAR exceed a period of ten years (or such shorter term as may
be required in respect of an ISO under section 422 of the Code).




          (d) Form and Timing of Payment under Awards. Subject to the terms of this Plan and
any applicable Award agreement, payments to be made by the Company or a Subsidiary upon the
exercise of an Option or other Award or settlement of an Award may be made in such forms as the
Committee shall determine, including without limitation cash, Stock, other Awards or other
property. Except as otherwise provided herein, the settlement of any Award may be accelerated, and
cash paid in lieu of Stock in connection with such settlement, in the discretion of the Committee
or upon occurrence of one or more specified events (in addition to a Change in Control). This Plan
shall not constitute an “employee benefit plan” for purposes of section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.




          (e) Non-Competition Agreement. Each Participant to whom an Award is granted under
this Plan may be required to agree in writing as a condition to the granting of such Award not to
engage in conduct in competition with the Company or any of its Subsidiaries for a period after the
termination of such Participant’s employment with the Company and its Subsidiaries as determined by
the Committee.




     8. Subdivision or Consolidation; Recapitalization; Change in Control; Reorganization.



          (a) Existence of Plans and Awards. The existence of this Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or other change in
the Company’s capital structure or its business, any merger or consolidation of the Company, any
issue of debt or equity securities ahead of or affecting Stock or the rights thereof, the
dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all
or any part of its assets or business or any other corporate act or proceeding. In no event will
any action taken by the Committee pursuant to this Section 8 result



10









 






in the creation of deferred compensation within the meaning of section 409A of the Code and
the regulations and other guidance promulgated thereunder.




          (b) Subdivision or Consolidation of Shares. The terms of an Award and the number of
shares of Stock authorized pursuant to Section 4 for issuance under the Plan shall be subject to
adjustment from time to time, in accordance with the following provisions:




               (i) If at any time, or from time to time, the Company shall subdivide as a whole (by a Stock
split, by the issuance of a distribution on Stock payable in Stock, or otherwise) the number of
shares of Stock then outstanding into a greater number of shares of Stock, then (A) the maximum
number of shares of Stock available in connection with the Plan or Awards as provided in Section 4
shall be increased proportionately, and the kind of shares or other securities available for the
Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or
securities) that may be acquired under any Award shall be increased proportionately, and (C) the
price (including the exercise price) for each share of Stock (or other kind of shares or
securities) subject to then outstanding Awards shall be reduced proportionately, without changing
the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject
to restrictions.



               (ii) If at any time, or from time to time, the Company shall consolidate as a whole (by
reverse Stock split, or otherwise) the number of shares of Stock then outstanding into a lesser
number of shares of Stock, (A) the maximum number of shares of Stock available in connection with
the Plan or Awards as provided in Section 4 shall be decreased proportionately, and the kind of
shares or other securities available for the Plan shall be appropriately adjusted, (B) the number
of shares of Stock (or other kind of shares or securities) that may be acquired under any Award
shall be decreased proportionately, and (C) the price (including the exercise price) for each share
of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be
increased proportionately, without changing the aggregate purchase price or value as to which
outstanding Awards remain exercisable or subject to restrictions.



               (iii) Whenever the number of shares of Stock subject to outstanding Awards and the price for
each share of Stock subject to outstanding Awards are required to be adjusted as provided in this
Subsection 8(b), the Committee shall promptly prepare, and deliver to each Participant, a notice
setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment,
the method by which such adjustment was calculated, and the change in price and the number of
shares of Stock, other securities, cash, or property purchasable subject to each Award after giving
effect to the adjustments.



               (iv) Adjustments under Subsections 8(b)(i) and (ii) shall be made by the Committee, and its
determination as to what adjustments shall be made and the extent thereof shall be final, binding,
and conclusive. No fractional interest shall be issued under the Plan on account of any such
adjustments.



          (c) Corporate Recapitalization.




               (i) If the Company recapitalizes, reclassifies its capital stock, or otherwise changes its
capital structure (a “recapitalization”), the number and class of shares of



11









 







Stock covered by an Option or an SAR theretofore granted shall be adjusted so that such Option
or SAR shall thereafter cover the number and class of shares of stock and securities to which the
holder would have been entitled pursuant to the terms of the recapitalization if, immediately prior
to the recapitalization, the holder had been the holder of record of the number of shares of Stock
then covered by such Option or SAR and the share limitations provided in Section 4 shall be
adjusted in a manner consistent with the recapitalization.



               (ii) In the event of changes in the outstanding Stock by reason of recapitalization,
reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any Award and not otherwise provided for by
this Section 8, any outstanding Awards and any agreements evidencing such Awards shall be subject
to adjustment by the Committee at its discretion as to the number and price of shares of Stock or
other consideration subject to such Awards. In the event of any such change in the outstanding
Stock, the share limitations provided in Section 4 may be appropriately adjusted by the Committee,
whose determination shall be conclusive.



          (d) Additional Issuances. Except as hereinbefore expressly provided, the issuance by
the Company of shares of stock of any class or securities convertible into shares of stock of any
class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case whether or not for fair value,
shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to Awards theretofore granted or the purchase price per share, if
applicable.




          (e) Change in Control. Upon a Change in Control the Committee, acting in its sole
discretion without the consent or approval of any holder, shall affect one or more of the following
alternatives, which may vary among individual holders and which may vary among Options or SARs
(collectively “Grants”) held by any individual holder: (i) accelerate the time at which Grants then
outstanding may be exercised so that such Grants may be exercised in full for a limited period of
time on or before a specified date (before or after such Change in Control) fixed by the Committee,
after which specified date all unexercised Grants and all rights of holders thereunder shall
terminate, (ii) require the mandatory surrender to the Company by selected holders of some or all
of the outstanding Grants held by such holders (irrespective of whether such Grants are then
exercisable under the provisions of this Plan) as of a date, before or after such Change in
Control, specified by the Committee, in which event the Committee shall thereupon cancel such
Grants and pay to each holder an amount of cash per share equal to the excess, if any, of the
amount calculated in Subsection 8(f) (the “Change in Control Price”) of the shares subject to such
Grants over the exercise price(s) under such Grants for such shares, or (iii) make such adjustments
to Grants then outstanding as the Committee deems appropriate to reflect such Change in Control;
provided, however, that the Committee may determine in its sole discretion that no
adjustment is necessary to Grants then outstanding; provided, further,
however, that the right to make such adjustments shall include, but not be limited to, the
modification of Grants such that the holder of the Grant shall be entitled to purchase or receive
(in lieu of the total shares or other consideration that the holder would otherwise be entitled to
purchase or receive under the Grant (the “Total Consideration”)), the number of shares of stock,
other securities, cash or property to which the Total Consideration would have been entitled to in



12









 






connection with the Change in Control (A) in the case of Options, at an aggregate exercise
price equal to the exercise price that would have been payable if the total shares had been
purchased upon the exercise of the Grant immediately before the consummation of the Change in
Control and (B) in the case of SARs, if the SARs had been exercised immediately before the
consummation of the Change in Control.




          (f) Change in Control Price. The “Change in Control Price” shall equal the amount
determined in clause (i), (ii), (iii), (iv) or (v), whichever is applicable, as follows: (i) the
per share price offered to holders of Stock in any merger or consolidation, (ii) the per share
value of the Stock immediately before the Change in Control without regard to assets sold in the
Change in Control and assuming the Company has received the consideration paid for the assets in
the case of a sale of the assets, (iii) the amount distributed per share of Stock in a dissolution
transaction, (iv) the price per share offered to holders of Stock in any tender offer or exchange
offer whereby a Change in Control takes place, or (v) if such Change in Control occurs other than
pursuant to a transaction described in clauses (i), (ii), (iii), or (iv) of this Subsection 8(f),
the Fair Market Value per share of the shares that may otherwise be obtained with respect to such
Grants or to which such Grants track, as determined by the Committee as of the date determined by
the Committee to be the date of cancellation and surrender of such Grants. In the event that the
consideration offered to stockholders of the Company in any transaction described in this
Subsection 8(f) or Subsection 8(e) consists of anything other than cash, the Committee shall
determine the fair cash equivalent of the portion of the consideration offered which is other than
cash.




     9. General Provisions.



          (a) Restricted Securities. Prior to a Qualifying Public Offering, the Stock to be
issued under this Plan, which may be issued in reliance on the exemption from registration set
forth in Rule 701, shall be deemed to be “restricted securities” as defined in Rule 144, such Rules
being promulgated by the Securities and Exchange Commission under the Securities Act as from time
to time in effect and applicable to the Plan and Participants. Resales of such Stock by the holder
thereof shall be in compliance with the Securities Act or an exemption therefrom. Such Stock may
bear a legend if determined necessary by the Committee in substantially the following form:




“THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE,
SOLD, PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE
HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO RULES-BASED
MEDICINE, INC. (WHICH, IN THE DISCRETION OF RULES-BASED MEDICINE,
INC., MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO RULES-BASED
MEDICINE, INC.) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER
DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE LAWS.”



13









 





          (b) Transferability.




               (i) Permitted Transferees. The Committee may, in its discretion, permit a Participant
to transfer all or any portion of an Option, or authorize all or a portion of an Option to be
granted to an Eligible Person to be on terms which permit transfer by such Participant; provided
that, in either case the transferee or transferees must be any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, in each case with respect to the Participant, any person sharing the Participant’s
household (other than a tenant or employee of the Company), a trust in which these persons have
more than fifty percent of the beneficial interest, a foundation in which these persons (or the
Participant) control the management of assets, or any other entity in which these persons (or the
Participant) own more than fifty percent of the voting interests (collectively, “Permitted
Transferees”); provided further that, (X) there may be no consideration for any such transfer and
(Y) subsequent transfers of Options transferred as provided above shall be prohibited except
subsequent transfers back to the original holder of the Option and transfers to other Permitted
Transferees of the original holder. Agreements evidencing Options with respect to which such
transferability is authorized at the time of grant must be approved by the Committee, and must
expressly provide for transferability in a manner consistent with this Subsection 9(b)(i).



               (ii) Qualified Domestic Relations Orders. An Option, Stock Appreciation Right,
Restricted Stock Unit Award, Restricted Stock Award or other Award may be transferred, to a
Permitted Transferee, pursuant to a domestic relations order entered or approved by a court of
competent jurisdiction upon delivery to the Company of written notice of such transfer and a
certified copy of such order.



               (iii) Other Transfers. Except as expressly permitted by Subsections 9(b)(i) and
9(b)(ii), Awards shall not be transferable other than by will or the laws of descent and
distribution. Notwithstanding anything to the contrary in this Section 9, an Incentive Stock Option
shall not be transferable other than by will or the laws of descent and distribution.



               (iv) Effect of Transfer. Following the transfer of any Award as contemplated by
Subsections 9(b)(i), 9(b)(ii) and 9(b)(iii), (A) such Award shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer, provided that the term
“Participant” shall be deemed to refer to the Permitted Transferee, the recipient under a qualified
domestic relations order, or the estate or heirs of a deceased Participant, as applicable, to the
extent appropriate to enable the Participant to exercise the transferred Award in accordance with
the terms of this Plan and applicable law and (B) the provisions of the Award relating to
exercisability shall continue to be applied with respect to the original Participant and, following
the occurrence of any applicable events described therein the Awards shall be exercisable by the
Permitted Transferee, the recipient under a qualified domestic relations order, or the estate or
heirs of a deceased Participant, as applicable, only to the extent and for the periods that would
have been applicable in the absence of the transfer.



               (v) Procedures and Restrictions. Any Participant desiring to transfer an Award as
permitted under Subsections 9(b)(i), 9(b)(ii) or 9(b)(iii) shall make application



14









 







therefor in the manner and time specified by the Committee and shall comply with such other
requirements as the Committee may require to assure compliance with all applicable securities laws.
The Committee shall not give permission for such a transfer if it may not be made in compliance
with all applicable federal, state and foreign securities laws.



               (vi) Registration. To the extent the issuance to any Permitted Transferee of any
shares of Stock issuable pursuant to Awards transferred as permitted in this Subsection 9(b) is not
registered pursuant to the effective registration statement of the Company generally covering the
shares to be issued pursuant to this Plan to initial holders of Awards, the Company shall not have
any obligation to register the issuance of any such shares of Stock to any such transferee.



          (c) Right of First Refusal. If any Participant (“Transferor”), regardless of whether
such Participant is the original holder of the Award contemplated in this Subsection 9(c), proposes
to sell, transfer, assign, hypothecate, make gifts of or in any manner dispose of, encumber, or
alienate (each individually constituting a “Transfer”) to a transferee, any Stock, obtained in
connection with any Award held by such Transferor, either pursuant to a bona fide offer (“Offer”)
from a potential transferee (“Offeror”) or by effecting a gift of the Stock (“Gift”) to a donee
(“Donee”) without consideration, then the Transferor must comply with the provisions of this
Subsection 9(c), including, without limitation, acknowledging and allowing the applicable time
periods to lapse with respect to the rights of the Company as provided herein, before accepting any
such Offer or otherwise affecting the Transfer of any Stock pursuant to such Offer, or affecting
any such Gift.




               (i) Statement of Offer. Before accepting any Offer or affecting any Gift, the
Transferor shall obtain from the Offeror or Donee, as the case may be, a statement (“Statement”) in
writing addressed to the Transferor and signed by the Offeror or Donee, setting forth: (A) the date
of the Statement (the “Statement Date”); (B) the number of shares of Stock covered by the Offer or
Gift and, in the case of an Offer, the price per share to be paid by the Offeror and the terms of
payment of such price; (C) the Offeror’s or Donee’s willingness to be bound by the terms of this
Subsection 9(c) and execute and deliver to the Company such documentation as required under this
Subsection 9(c); (D) the Offeror’s or Donee’s name, address and telephone number; and (E) the
Offeror’s or Donee’s willingness to supply any additional information about himself or herself as
may be reasonably requested by the Company. Promptly upon receipt of a Statement, and before
accepting the Offer or affecting the Gift to which the Statement relates, the Transferor shall
deliver to the Company (1) a copy of the Statement and (2) in the case of an Offer, evidence
reasonably satisfactory to the Company as to the Offeror’s financial ability to consummate the
proposed purchase.



               (ii) Company Rights. Subject to the provisions of Subsection 9(c)(i), upon receipt of
a copy of the Statement, the Company shall have the exclusive right and option (the “Right”), but
not the obligation, to purchase all of the shares of Stock that the Offeror proposes to purchase
from the Transferor or, in the case of a Gift, that the Transferor proposes to give to the Donee
(collectively, “Subject Securities”) (A) in the case of an Offer, for the per share price and on
the terms as set forth in the Statement; provided, however, that if the purchase
price is payable in whole or in part in property (which term shall include the securities of any
issuer other than the Company) other than cash, the Company may pay, in lieu of such property,



15









 







a sum of cash equal to the fair market value of such property as determined by the Transferor
and the Company in good faith or, if the Transferor and the Company do not agree on the fair market
value of such property within five days after the Company delivers written notice (as described
below) of its intention to exercise the Right, then the Transferor and the Company shall select one
independent appraiser (with each of the Transferor and the Company jointly bearing one-half of the
expense of the appraiser) to determine the fair market value of that property and the appraised
fair market value of that property as determined by such appraiser shall be deemed the fair market
value of that property for purposes of this Subsection 9(c)(ii), or (B) in the case of a Gift, the
Fair Market Value of the Subject Securities, as determined in good faith by the Company; provided
that the Transferor may elect to retain the Subject Securities rather than sell the Subject
Securities at the Fair Market Value as determined by the Company by giving written notice thereof
to the Company within five days after such determination by the Company is received in writing by
the Transferor. The Company shall exercise the Right by giving written notice thereof to the
Transferor. Upon exercising the Right, the Company shall have the obligation, to the extent it
lawfully may do so, to purchase the Subject Securities within 30 days after the date of the
Company’s receipt of its copy of the Statement on and subject to the terms and conditions hereof.
If the terms of the purchase include the Transferor’s release of any pledge or encumbrance on the
Subject Securities and the Transferor shall have failed to obtain the release of the pledge or
encumbrance by the purchase date, at the Company’s option the purchase shall occur on the scheduled
date with the purchase price reduced to the extent of all unpaid indebtedness for which the Subject
Securities are then pledged or encumbered. Failure by the Company to exercise the Right, or
failure by the Company to otherwise perform its obligations under this Subsection 9(c)(ii), within
the 30 day period herein prescribed shall be deemed an election by the Company not to exercise the
Right. If the Company exercises the Right and is unable for any reason to perform its obligations
thereunder in accordance with this Subsection 9(c), the Company may assign all or a portion of its
rights under the Right to any one or more of the Company’s stockholders (other than the Transferor)
(“Assignee Stockholder”), as the Board shall determine, in its sole and absolute discretion.



               (iii) Purchase of Less Than All Shares. Anything in Subsection 9(c) to the contrary
notwithstanding, the Company and any Assignee Stockholder individually may, pursuant to the
exercise of the Right, purchase fewer than all of the Subject Securities provided that such Persons
in the aggregate purchase all, and not less than all, of the Subject Securities, and it shall be a
condition precedent to the obligation of any of such Persons to purchase any Subject Securities,
that all, and not less than all, of the Subject Securities have been elected to be purchased
pursuant to the exercise of the Right.



               (iv) Failure to Exercise Right or Consummate Transaction. If the Company elects not
to exercise the Right, or if the Right is exercised and the obligations to be performed thereunder
by the Company are not performed in accordance with this Subsection 9(c), or if the Company’s
rights are assigned to an Assignee Stockholder and such Assignee Stockholder fails to perform his
or her obligations under the assigned Right in accordance with this Subsection 9(c), then, subject
to the application of any applicable state or federal securities laws, the Transferor may dispose
of all of the Subject Securities within 90 days after the date of the Statement at the per share
price and on the terms, if any, as set forth in the Statement free and clear of the terms of this
Subsection 9(c); provided, however, that (A) any subsequent transfer by the Offeror
or Donee, as applicable, shall once again be subject to this Subsection 9(c) and (B) if



16









 







the sale or gift of the Subject Securities is not consummated within such 90-day period, then
the Transfer of any such Stock shall once again be subject to the terms of this Subsection 9(c).



               (v) Legend. To assure the enforceability of the Company’s rights under this
Subsection 9(c), until the date of a Qualifying Public Offering, each certificate or instrument
representing Stock or an Award held by him, her, or it may, in the Committee’s discretion, bear a
conspicuous legend in substantially the following form:




“THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO
THIS AGREEMENT] ARE SUBJECT TO THE COMPANY’S RIGHT OF FIRST REFUSAL
IN THE CASE OF A TRANSFER AS PROVIDED UNDER THE RULES-BASED
MEDICINE, INC. 2007 LONG TERM INCENTIVE PLAN AND/OR AN AWARD
AGREEMENT ENTERED INTO PURSUANT THERETO. COPIES OF SUCH PLAN AND
AWARD AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT
ITS PRINCIPAL EXECUTIVE OFFICES.”



               (vi) Expiration. The rights and obligations pursuant to this Subsection 9(c) hereof
will terminate upon the date of a Qualifying Public Offering.



          (d) Purchase Option.




               (i) Except as otherwise expressly provided in any particular Award, (A) if a Participant
ceases to be employed by or perform services for the Company or its Subsidiaries for any reason at
any time or (B) upon the occurrence of a Change in Control, the Company (and/or its designee(s))
shall have the option (the “Purchase Option”) to purchase, and the Participant (or the
Participant’s executor or the administrator of the Participant’s estate in the event of the
Participant’s death, or the transferee of the Stock or Award in the case of any disposition, or the
Participant’s legal representative in the event of the Participant’s incapacity) (hereinafter,
collectively with such Participant, the “Grantor”) shall sell to the Company and/or its
designee(s), all or any portion (at the Company’s option) of the shares of Stock issued pursuant to
this Plan and held by the Grantor (such shares of Stock herein referred to as the “Purchasable
Shares”).



               (ii) The Company shall give notice in writing to the Grantor of the exercise of the Purchase
Option within one year of the date of the termination of the Participant’s employment or service
relationship or the date of the Change in Control. Such notice shall state the number of
Purchasable Shares to be purchased and the determination of the Board of the Fair Market Value per
share of such Purchasable Shares, or the Change in Control Price as defined in Subsection 8(f), if
applicable. If no notice is given within the time limit specified above, the Purchase Option shall
terminate.



               (iii) The purchase price to be paid for the Purchasable Shares purchased pursuant to the
Purchase Option shall be, the Fair Market Value per share, or the Change in Control Price if
applicable, as of the date of the notice of exercise of the Purchase Option times



17









 







the number of shares being purchased. The purchase price shall be paid in cash. The closing
of such purchase shall take place at the Company’s principal executive offices within ten (10) days
after the purchase price has been determined. At such closing, the Grantor shall deliver to the
purchasers the certificates or instruments evidencing the Purchasable Shares being purchased free
and clear of all liens and encumbrances (if any), duly endorsed (or accompanied by duly executed
stock powers) and otherwise in good form for delivery, against payment of the purchase price by
check of the purchasers. In the event that, notwithstanding the foregoing, the Grantor shall have
failed to obtain the release of any pledge or other encumbrance on any Purchasable Shares by the
scheduled closing date, at the option of the purchasers, the closing shall nevertheless occur on
such scheduled closing date, with the cash purchase price being reduced to the extent of all unpaid
indebtedness for which such Purchasable Shares are then pledged or encumbered.



               (iv) To assure the enforceability of the Company’s rights under this Subsection 9(d), until
the date of a Qualifying Public Offering, each certificate or instrument representing Stock or an
Award held by him, her, or it may, in the Committee’s discretion, bear a conspicuous legend in
substantially the following form:




“THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO
THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO REPURCHASE PROVIDED
UNDER THE PROVISIONS OF THE RULES-BASED MEDICINE, INC. 2007 LONG
TERM INCENTIVE PLAN AND/OR AN AWARD AGREEMENT ENTERED INTO PURSUANT
THERETO. COPIES OF SUCH PLAN AND AWARD AGREEMENT ARE AVAILABLE UPON
WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.”



               (v) The Company’s rights under this Subsection 9(d) shall terminate upon the date of a
Qualifying Public Offering.



          (e) Taxes. The Company and any Subsidiary is authorized to withhold from any Award
granted, or any payment relating to an Award under this Plan, including from a distribution of
Stock, amounts of withholding and other taxes due or potentially payable in connection with any
transaction involving an Award, and to take such other action as the Committee may deem advisable
to enable the Company and Participants to satisfy obligations for the payment of withholding taxes
and other tax obligations relating to any Award. This authority shall include authority to
withhold or receive Stock or other property and to make cash payments in respect thereof in
satisfaction of a Participant’s tax obligations, either on a mandatory or elective basis in the
discretion of the Committee.




          (f) Changes to this Plan and Awards. The Board may amend, alter, suspend, discontinue
or terminate this Plan or the Committee’s authority to grant Awards under this Plan without the
consent of stockholders or Participants, except that any amendment or alteration to this Plan,
including any increase in any share limitation, shall be subject to the approval of the Company’s
stockholders not later than the annual meeting next following such Board action if



18









 






such stockholder approval is required by any federal or state law or regulation or the rules
of any stock exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit other such changes to
this Plan to stockholders for approval; provided, however, that, without the
consent of an affected Participant, no such Board action may materially and adversely affect the
rights of such Participant under any previously granted and outstanding Award. The Committee may
waive any conditions or rights under, or amend, alter, suspend, discontinue or terminate any Award
theretofore granted and any Award agreement relating thereto, except as otherwise provided in this
Plan; provided, however, that, without the consent of an affected Participant, no
such Committee action may materially and adversely affect the rights of such Participant under such
Award.




          (g) Limitation on Rights Conferred under Plan. Neither this Plan nor any action taken
hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue
as an Eligible Person or Participant or in the employ or service of the Company or a Subsidiary,
(ii) interfering in any way with the right of the Company or a Subsidiary to terminate any Eligible
Person’s or Participant’s employment or service relationship at any time, (iii) giving an Eligible
Person or Participant any claim to be granted any Award under this Plan or to be treated uniformly
with other Participants or employees or other service providers, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until the Participant is
duly issued or transferred shares of Stock in accordance with the terms of an Award.




          (h) Unfunded Status of Awards. This Plan is intended to constitute an “unfunded” plan
for certain incentive awards.




          (i) Nonexclusivity of this Plan. Neither the adoption of this Plan by the Board nor
its submission to the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or a committee thereof to adopt such other incentive
arrangements as it may deem desirable. Nothing contained in this Plan shall be construed to
prevent the Company or any Subsidiary from taking any corporate action which is deemed by the
Company or such Subsidiary to be appropriate or in its best interest, whether or not such action
would have an adverse effect on this Plan or any Award made under this Plan. No employee,
beneficiary or other person shall have any claim against the Company or any Subsidiary as a result
of any such action.




          (j) Fractional Shares. No fractional shares of Stock shall be issued or delivered
pursuant to this Plan or any Award. The Committee shall determine whether cash, other Awards or
other property shall be issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.




          (k) Severability. If any provision of this Plan is held to be illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such
provision shall be fully severable and the Plan shall be construed and enforced as if the illegal
or invalid provision had never been included herein. If any of the terms or provisions of this
Plan or any Award agreement conflict with the requirements of section 422 of the Code (with respect
to Incentive Stock Options), then those conflicting terms or provisions shall be



19









 






deemed inoperative to the extent they so conflict with the requirements of section 422 of the
Code. With respect to Incentive Stock Options, if this Plan does not contain any provision
required to be included herein under section 422 of the Code, that provision shall be deemed to be
incorporated herein with the same force and effect as if that provision had been set out at length
herein; provided, further, that, to the extent any Option that is intended to qualify as an
Incentive Stock Option cannot so qualify, that Option (to that extent) shall be deemed an Option
not subject to section 422 of the Code for all purposes of the Plan.




          (l) Governing Law. All questions arising with respect to the provisions of the Plan
and Awards shall be determined by application of the laws of the State of Texas, without giving
effect to any conflict of law provisions thereof, except to the extent Texas state law is preempted
by federal law. The obligation of the Company to sell and deliver Stock hereunder is subject to
applicable federal and state laws and to the approval of any governmental authority required in
connection with the authorization, issuance, sale, or delivery of such Stock.




          (m) Conditions to Delivery of Stock. Nothing herein or in any Award granted hereunder
or any Award agreement shall require the Company to issue any shares with respect to any Award if
that issuance would, in the opinion of counsel for the Company, constitute a violation of the
Securities Act or any similar or superseding statute or statutes, any other applicable statute or
regulation, or the rules of any applicable securities exchange or securities association, as then
in effect. At the time of any exercise of an Option or Stock Appreciation Right, or at the time of
any grant of a Restricted Stock Award, Restricted Stock Unit, or other Award the Company may, as a
condition precedent to the exercise of such Option or Stock Appreciation Right or settlement of any
Restricted Stock Award, Restricted Stock Unit or other Award, require from the Participant (or in
the event of his or her death, his or her legal representatives, heirs, legatees, or distributees)
such written representations, if any, concerning the holder’s intentions with regard to the
retention or disposition of the shares of Stock being acquired pursuant to the Award and such
written covenants and agreements, if any, as to the manner of disposal of such shares as, in the
opinion of counsel to the Company, may be necessary to ensure that any disposition by that holder
(or in the event of the holder’s death, his or her legal representatives, heirs, legatees, or
distributees) will not involve a violation of the Securities Act or any similar or superseding
statute or statutes, any other applicable state or federal statute or regulation, or any rule of
any applicable securities exchange or securities association, as then in effect.




          (n) Section 409A of the Code. In the event any Award granted pursuant to the Plan
provides for a deferral of compensation within the meaning of the Nonqualified Deferred
Compensation Rules, such Award shall be designed to comply with the Nonqualified Deferred
Compensation Rules.




          (o) Plan Effective Date. This Plan has been adopted by the Board effective as of
October 12, 2007.





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